any advice on how i can proceed?

Question

Hello everyone!  Im a new RE investor and currently seeking  some advice on how i can proceed with a current situation!

I currently own a primary residence (3 family) with an FHA loan, and a single family (investment property) with a DSCR loan!

Im in the process of acquiring another property but unable to perform due to my debt to income ratio being too high!

Any advice on what i can do?

I do have cash reserves for a 20% down payment but i don't really want to go that route!

Thanks in Advance!

Adrian Tenemaza · Answer

Thank you for the  advice Sergey!

i did lower down some credit cards. as of now my main goal is to try to buy another property with a lower downpayment (conventional 5% DP ideally) so i can use my cash into multiple properties!

Any advice ?

Adrian Tenemaza · Answer

thank you for the advice Jay!

I did pay some of my credits cards that were hurting my credit score and DTI ratio. As of now I have a 750 credit score but still wanted to try to get into a conventional loan with a 5% down payment so i can move out of my first primary residence. as of now my main goal is to try to buy another property with a 5% conventional loan (to live in it for a year or so) and then try to get another investment property with a 20% dow payment as soon as i can.

any advice?

Jay Voorhees · Answer

Hi Adrian - With 20% down, you could get a second DSCR loan. Otherwise, I agree with Sergey. You could use some of the available cash to pay off current debt (car loans, credit cards if these are applicable), but really you'd want a lender to run these numbers for you and tell you what to target.

If you're aiming for a conventional loan on this investment property, the lowest down payment allowed is 15%, and that's likely going to come at a cost in points, so I worry you wouldn't be retaining that much in the end.

Sergey A. Petrov · Answer

Three options- lower your debt, increase your income, do go with the 20% downpayment (the norm for investment properties). One more could be finding a screaming deal that cash flows significantly at closing which could help with new financing. Another alternative could include getting a HELOC on an existing property if you have enough equity to reduce the cash out of pocket but that would probably drive your DTI even higher